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Why China Wants (and Needs) Foreign Farm Land

China eats about 20 percent of the world’s food, reasonably expected for its 1.3 billion people. But the country only has nine percent of the world’s farmland.

For decades, the disparity was tolerable. China found ways to maximize its domestic food supply with its agrarian society. Now as China’s population continues to rise, fueled by rapid industrialization, the country is running into a wall. Numbers like that simply aren’t sustainable.

It’s a common reality faced by industrializing countries. At a certain point in the development process, nations face a perfect economic storm. Population increases, which fuels consumer demand. Housing more people means building homes where crops might normally grow. And environmental changes tend to limit the food output. South Korea, Egypt and the United Arab Emirates have all been in that position over the past five years. They could use more farmers, but what they really need is more land.

What’s the solution? In short, to buy more land—and to buy it from countries that either don’t need it, or could use the money instead. In 2008, UAE brought 324 hectares (1.25 square miles) of land in Pakistan. A year later, South Korea bought nearly twice that amount in Sudan. This week, China announced the biggest land lease ever: 3 million hectares (11,500 square miles) of Ukrainian land. Or put more simply: 1/20th of all Ukraine.

Deals like this aren’t a win-win. Land is inherently zero-sum, so terrain that China is harvesting in the Ukraine won’t be used to feed the future appetite of Ukrainian people.

But the Eastern European country doesn’t entirely lose, either. The deal will funnel $2.6 billion into Ukraine annually for the next 50 years. China will also send seeds and fertilizer, as well as build some vital infrastructure in Crimea, an autonomous part of Ukraine.

Still, it seems to raise the prospect of a new type of colonialism, where wealthy countries extract resources from poorer ones all under the guise of an economic transfer. According to a study in January, between 0.75 and 1.75 percent of the world’s farmland has been transferred from locals to foreign investors. Those aren’t just transactional relationships. Over the next 50 years (the length of the China-Ukraine agreement) the relationship may play into policy matters, too—when, for example, China tries to build support for a new trade policy or against a military action.

Countries conduct economic transactions everyday, perhaps none more than the U.S., which is one of China’s largest debtors. But Ukraine may be the biggest case study of what will happen when a creditor moves from the financial ether of computers into a country’s literal backyard.

Comments

  1. MR. Pyae Sone
    Myanmar
    March 17, 2:28 am

    there are a lot of wild land or farm land for long term lease about 50 years. the place is located between two biggest population country . China and India.

    if u wanna know anything , feel free to contact me. uopyaesone@gmail.com

  2. Kasirye Patton
    Kampala
    February 28, 12:49 am

    I also have access to 10sq of arable land that I would like to lease out for 49yrs.all neccesarry documents are available and u can email me on kasiryepatton@yahoo.com

  3. Armand Strauss
    Eshowe
    February 21, 7:06 am

    If you know of anyone looking for farmland in South Africa please get in contact with me I have plenty of land available: strauss@xlr8ed.biz

  4. Andreas
    Norway
    January 28, 1:28 pm

    What strikes me as odd is how USA has become one of the largest buyers into this new land grab market. As it USA didn’t have enough farmland as it is. I smell dirty traders long way!

  5. Observer
    US
    January 2, 2:28 pm

    When it comes to a country’s land, that country people decide for the best of their future. So as long as those people were given enough opportunities the deal is fair. But in my experience these kind of deal happens with corrupt officials without considering country’s future, there should have been a general consensus before this deal went through.

  6. john oslek
    australia
    January 1, 6:43 pm

    Sigrid,
    Where do you get your information from? Have you lived in china, visited many times, hard to tell from your article.
    A few points 1. population figures can’t be believed as country china have many children to run the farm not one.
    2.Urban area like Beijing has expanded by 25% and is closer to 20 million now. The locals say too many people now live here.
    3. 99% of Chinese companies are controlled locally by the Chinese government representative, either directly or through the workers rep.
    4. the arable land is becoming polluted and producing food high in cancer causing agents. Call into a local hospital.

    The Chinese have no option but to look elsewhere for food security in the future. The long term result may be protection of those acquired assets and that’s where the conversation will really get complicated.

  7. Bob Loblaw
    Canada
    December 31, 2013, 12:13 am

    China’s human right’s record makes colonialism pale in comparison. The best academic research numbers suggest that during the years 1928-1987, approximately 76,702,000 people were killed in China, under the various movements; The Totalization Period, Collectivization and “The Great Leap Forward”, The Great Famine and Retrenchment Period and The “Cultural Revolution”…..and yes I am including the deaths associated with the conflict with the Japanese during WW2, but they accounted for 3.9 million deaths, leaving over 72 million to die at the hands of their own people. Oh and math, not opinion squashes the theory that China’s population is slowing or stopped, on the contrary the best math models show that their population will rise by 5% by 2020 and by another .5% by 2030. China is a pariah country dealing with an illegitimate government in Ukraine that does not seek the consensus of it’s own people……….

  8. Elena
    China
    December 28, 2013, 11:33 pm

    When China looks to foreign land for outsourcing and sends its own technologies, such as seeds, it displaces native biodiversity and can also send its own workforce, bypassing local trade unions.

    Some thirty agricultural deals have been sealed in recent years to give Chinese firms access to foreign farmland in exchange for Chinese technologies, training and infrastructure development. This article details some of the deleterious effects these deals, particularly their impact on local populations: http://www.grain.org/article/entries/93-seized-the-2008-landgrab-for-food-and-financial-security

  9. Tor
    Norway
    December 22, 2013, 2:39 am

    Sigrid, I’m really surprised to hear that China’s population isn’t increasing. In fact, this is sensational news. What has happened lately?

  10. Sigrid
    Mozambique
    November 26, 2013, 12:09 pm

    I have to disagree with this article’s analysis on a number of points:

    1. China’s population is not increasing, the restrictions popularily referred to as the one child policy have been fairly effective in limiting population growth (the urban proportion of the population is however increasing, and with higher incomes follow new dietary preferences, such as meat- the changes in demand stem from this not population growth)

    2. Chinese agriculture is highly productive and continuously growing (5% anually), in fact they surpassed their 2020 target for grain production already in 2011. In addition further agricultural reform is expected to be able to boost productivity and so there is room for further agricultural expansion domestically.

    3. The national policy of China is to be self-sufficient and produce 95% of food consumed domestically. So what is the basis for these “investing in foreign land for food-security” speculations?

    4. Chinese outwards FDI in agriculture is actually very small relative to that into other sectors and industries. I would rather say that Chinese outwards FDI into agriculture has been lagging behind. Why is it then so strange that the world’s second largest economy engages in the global value chains? Isn’t a more plausible explanation for why chinese agro companies are expanding abroad now perhaps because they possess agricultural expertise (after all it is quite an amazing feat that a country with 20%of the world’s population can manange to be nearly self-reliant despite only possessing less than 9% of the world’s arable land).

    5. Why is it that when a european / american company invests some where we refer to it as an American company (or Norwegian company), but when it is a Chinese company investing somehwere, then all of a sudden it is refered to as “CHINA”? Since when did China become a monolithic entity?

    6. Why is it when a european/american company invests it is reported in the media as “investment”, but when a chinese company invests it is “neo-colonialism” and “land-grabbing”?

    7) As for legal rights, I would expect anyone investing or buying property to gain some legal rights to it…that’s kind of the basis of functioning markets no?

  11. Beware
    Rampa
    November 19, 2013, 1:13 am

    The biggest mistake the Ukrrainians can do is to give the Chinese land. They wil come like flies and invest the country and after the 50 years has passed there will be more Chinese than Ukrainians. Safe youreselfs and get rid of them.

  12. Yulia
    Kyiv
    October 20, 2013, 10:52 am

    This is poor reporting. The apparent “3 million hectare deal” was refuted within a day or two of the media report. Shame on you National Geographic! You ought to be more diligent in your reporting.

  13. Robi
    Czech Republic
    October 11, 2013, 5:53 am

    Well guys, Chinese people and goverment are the most clever in the world and the West is the most stupid. Ok, we sell land to China and let chinese own the biggest part of the land and resources in the world. What will be the next step ?
    A war. War for food and oil and uranium. This will be the end of the West. We have not chance against nowadays China with our “human rights’ concept and with our care for “multiculti” and for every looser, homeless economy imigrant from the world. We pay to loosers by chinese money earned from selling our own land. OMG !!!

  14. bfar
    September 27, 2013, 2:19 pm

    Mao is but ONE EXAMPLE of the murdering intolerance of dissidence in China history. HUMAN RIGHTS for everyone?
    “RIGHTS” dont exist in China — the individual doesnt matter or count. Just read history before you make it sound like the West is evil …..and China is some warm, good, kind empire……nothing could be further from the truth — and i would never dream of supporting chinese ownership of farmland in ANY country i cared about — which is all of them.

  15. bfar
    September 27, 2013, 2:13 pm

    CHINA a Nice Guy???? SEVENTY MILLION PEOPLE SLAUGHTERED BY CHINA!!! 70 MILLION PEOPLE KILLED! WAKE UP — the real history of China =
    you dissent from the Chinese powers-that-be? you are DEAD.. FACT = SEVENTY MILLION DISSIDENTS were slaughtered — many more tortured enslaved -labor camps — these are the “good guys”??????– MURDER OF SEVENTY MILLION dissidents in China —- 70 MILLION dissidents . Dead. Wake up. China makes ANY country the West look good in terms of Humanity.

  16. James Towel
    Good
    September 26, 2013, 12:18 am

    Me thinks Paul G is one of the famous Chinese government sock puppets.

  17. Ralph
    South Africa
    September 25, 2013, 11:50 pm

    How does a deal between rich China and impoverished Ukraine qualify as ‘fair trade’? This is the elephant bargaining with the mouse. And take a look at China’s rapine behaviour in places like Papua New Guinea before you portray them as benevolent investors.

  18. Paul G
    LA
    September 25, 2013, 8:06 pm

    Your piece is extremely biased. All fair trade is inherently win-win. The Chinese did not use the threat of force to acquire the farmland. They asked the Ukrainians if the Ukrainians were willing to lease them 3,000,000 hectares of land for the price of $2,600,000,000 per year. The Ukrainians agreed. This is not colonialism.

    The British, French, Germans, etc raped and killed millions of people in Africa, North America, South America, Australia, and India. They took land by force and enslaved the local population. This is colonialism.

    Please do not try to compare China’s business deals, conducted between two willing parties, with the shameful history of the West. They are not the same.

    For what its worth, the Chinese treated the people of Africa, the Native Americans, the Indians, the Mayans, and the Australian Aborigines far better than the Caucasians ever did.

  19. Dan Stone
    September 25, 2013, 2:09 pm

    A good point, Joe.

    But I think it’s important to realize how this exchange differs from more conventional economic transactions. Certainly in this case Ukraine elected this arrangement. But it still sets up a scenario where China will have legal rights on Ukrainian land, which is not a usual part of economic transfers.

  20. Joe S
    September 25, 2013, 12:59 pm

    Why use loaded words like “colonialism”? It’s simply an economic transaction. If the Ukrainians decide not to sell the products to China, what is China going to do? Invade it? No.